By Barani Krishnan
Investing.com - The ticking time bomb that's Venezuela is giving oil traders shivers and OPEC a bonus ride to higher prices.
Global crude futures rose about 1% for a second-straight day Tuesday as the ongoing political and economic crisis in Caracas further restricted supply from what was once one of the world's biggest oil exporters.
U.S. West Texas Intermediate crude settled up 8 cents, or 0.1%, at $56.87 per barrel, extending Monday's 1.3% gain.
U.K. Brent, the global oil benchmark, was also higher by 8 cents, or 0.1%, at $66.66 by 3:40 PM ET (19:40 GMT). It gained 1.4% in the previous session.
"Buyers of WTI continue to step in and provide support after every small dip in prices," said Fawad Razaqzada, a London-based analyst at forex.com.
"That’s why, for example, the faster-moving 21-day exponential average has been continually defended ever since prices broke above it in early January," Razaqzada said. "The slope of this moving average is now positive, objectively telling us that the short-term trend is indeed bullish. So, unless oil prices now create a distinct reversal, we could see a new higher high on WTI form, possibly as soon as this week."
Scott Shelton, energy futures broker and commentator at ICAP (LON:NXGN) in Durham, N.C., agreed.
"The market probed to the downside, found no pain .... and now will probe to the upside," Shelton said, adding that it could turn range-bound again without a new catalyst.
Some say oil prices should be under pressure on concerns that global demand growth could be slowing and that Russia might eventually want out of OPEC's production cut deal, especially with growing proof that Saudi Arabia's export reductions are causing Riyadh to cede market share to U.S. shale.
Yet, prices remain supported on distractions over Venezuela and fear that the Saudis will double down on cuts until they get the market to where they want, speculated to be around $75 per barrel at least for Brent.
Venezuela's opposition-run congress on Monday declared a "state of alarm" over a five-day power blackout that has crippled the country's oil exports and left millions of citizens scrambling to find food and water.
"The ongoing situation in Venezuela is providing additional tailwind support to the market," Razaqzada said.
"Consequently, oil market participants are paying less attention to rising U.S. shale oil production and concerns over slower demand growth," he added. "With the U.S. winning market share from the OPEC, the cartel’s influence on prices will likely diminish further in the long term. These concerns may come back to haunt the market at some later point in time, but right now the focus is elsewhere."
Razaqzada pegged WTI's immediate high target at $57.60, the peak for 2019, which, if broken, will allow the U.S. benchmark to attempt the next technical barrier of $59.60 and eventually $60.
Traders will also be on the lookout for a snapshot of what U.S. oil supply-demand could have been for last week in data due at 4:30 PM ET from industry group, The American Petroleum Institute (API).
Traders expect the U.S. Energy Information Administration (EIA) to report that U.S. crude oil inventories grew by 2.9 million barrels for the week to March 8 versus the previous week's build of 7.1 million, in official data due at 10:30 AM ET on Wednesday. The API numbers due on Tuesday will be an important precursor to that.